Northern Rock will miss its target for repaying its £24bn emergency loan from the taxpayer if the housing market deteriorates further and the economy plunges into a 1992-style recession, it warned yesterday.

The new executive team of the nationalised Newcastle-based bank told the Treasury select committee of MPs it would review its business plan this autumn. The plan, which involves halving the bank's balance sheet to £50bn by 2011 and axing 2,000 jobs, is intended to repay the Bank of England by the end of 2010 and allow the government guarantee for depositors and creditors to be lifted by 2012.

The bank has stress-tested its model against a 1992-style recession after mortgage rates had soared to 15% and house prices fell by a similar amount. Ann Godbehere, chief financial officer, said that under such conditions repayment could be delayed and there was no certainty when the government guarantees could be lifted. She put the delay at "about six months".

Ron Sandler, parachuted in as executive chairman in February, said the business plan would be looked at again in the third quarter of the year to see if "it looks robust to the world as we see it".

Sandler, who told MPs he was doing the £90,000-a-month job out of "public spiritedness", said a new pay structure for all employees would motivate them to meet the repayment targets - 25% of the loan should be paid back by the end of 2008. The mortgage operation will be run down from a 7.5% market share before its near-collapse in September to 2.4% by 2011.

The plan relies on a 60% redemption rate of mortgage customers and Godbehere admitted that may slip if other lenders stepped back from the market, forcing more customers on fixed and tracker rates to transfer to its standard variable rate.

Sandler pledged to maintain the Northern Rock brand and indicated that sponsorship of Newcastle United football club and the Newcastle Falcons rugby team was in the bank's "commercial interest".

The bank also clarified remarks by former chief executive Adam Applegarth who told the committee in October, before he was ousted, that the Financial Services Authority had attended a board meeting in January 2007. Naming its former supervisors for the first time, the bank said FSA officials Jackie Sharp and Andy Maysey attended a March 2006 board meeting. Maysey is understood to be one of five regulators of Northern Rock who have left the FSA. Godbehere said she now had frequent contact with lead supervisor Andy Cope and his colleague Joanna Baird.